Editorial: This government owns too many businesses
The following is an editorial from today's print edition of the BBJ.
Our look back on the deals of the year is heavily dominated by government business. Unfortunately, 25 years after communism ended, the Hungarian government has decided to start taking over businesses again, and it is making the biggest purchases.
This is a disturbing trend because the economy can suffer if any government gets too heavily involved in commercial activity. But there are reasons why greater state ownership is particularly disturbing with this government.
The economic argument against state ownership is simple: If the government controls all the money, there is less room for businesses to spend or invest. Economist Milton Friedman spoke about the problem of “crowding out”. Most economists agree that profit-driven businesses are generally more efficient than government bureaucracies, which tend to operate for more political reasons. If the state owns too many of our businesses, we will lag behind more competitive economies.
But the economic concerns of state ownership may take a back seat to the particular problems of this government: a lack of transparency and a consequent lack of credibility.
If the government wants to become a business manager, then we taxpayers are the shareholders. We deserve full disclosure on how our companies are doing, including quarterly and annual reports with credible figures on income and profits, and an explanation of whether we shareholders are due any dividends. We have a right to know how the government is running the companies that we have paid for through income taxes, special taxes and the highest value added tax in the EU.
Instead, when the Hungarian government purchases a firm, they simply claim that the purchase “is in the national interest” and then the competition authority is not allowed to review the transaction. The government sealed a deal in early December to purchase Budapest Bank, the eighth largest bank in Hungary, and Economics Commissioner Mihály Varga says the purchase value “will be revealed later”.
When the government moves ahead on a nuclear deal with Russia, saddling Hungary and its children with a €10 billion debt and tethering our future to a nuclear plant for decades to come, there should be a more thorough sharing of the details. Not even members of Parliament are being let in on such “state secrets” as the environmental impact assessment at the Paks site for the new reactors.
The government’s attitude seems to be that we just have to trust them with state business, an approach that would be arrogant in any circumstances. But this is a government that is being accused of corruption by literally tens of thousands of demonstrators, who are taking to the street every other week. This is a government where János Lázár, the official in charge of the nuclear plant, MKB Bank and other state enterprises, cannot credibly explain how he can afford the flat he just bought in Buda, which he valued at HUF 30 million and some media say is worth HUF 60 mln. This is a government that makes absurd excuses to avoid investigating complaints of corrupt tax practices raised by an American corporation in 2011, a whistleblower working for the tax office in 2013 and now the American Embassy.
This is a government that could be said to have some “trust issues” with its people.
No government should be too heavily involved in business, but that is especially true for this government.
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